Can blockchain technology create another era of Asian tigers?

The integration of smart contracts into blockchain tech might just usher in the creation of another era of Asian tigers as more ventures from the region get into the game

It has been nearly three decades since tiger economies were in mainstream discussions in Asia, but that doesn’t mean that progress in the region has stalled. A number of Asian economies are displaying rapid growth especially with the emergence of tech as an economic driver. Barriers to entry in the tech industry have also become much lower over the years. With new technologies now comes the opportunity for ventures to create unique products and services to offer to global markets.

Blockchain tech is now among the hottest trends, especially since new blockchain platforms like Ethereum have extended its use beyond cryptocurrencies. The integration of smart contracts into blockchain has allowed startups to explore new and exciting uses. It might just usher in the creation of another era of Asian tigers as more ventures from the region get into the game.

Diverse blockchain applications

Blockchain in itself is already a powerful technology. Built as a distributed public ledger, blockchains are an ideal tool for transparent and immutable recordkeeping. This is why it has been an ideal platform for cryptocurrency and payments. Southeast Asia’s blockchain startups like Toast and Coins.ph have mainly focused on this use to provide payments and remittance services that are lower-cost alternatives to other payment methods.

The integration of smart contracts into the blockchain has even widened its possible applications. Smart contracts are software that can automate the execution of agreements while using blockchain tech to record each related transaction. Such a technology could empower quick and safe transactions not only for e-commerce but also for big-ticket deals such as real estate and automobile sales.

A slew of various services can be built around such an ecosystem.

iEx.ec, a collaboration between Chinese and European experts, uses blockchain and smart contracts to build a distributed cloud that supports distributed applications. Think of it as a peer-to-peer cloud where anyone can allow others to rent spare computing resources.

Hong Kong-based KYC-Chain offers an blockchain identity platform to other businesses and financial institutions. Know your customer (KYC) is a common regulation that requires financial institutions to secure information about customers to prevent fraud and money laundering.

Some ventures are even looking at more altruistic applications of blockchain. For example, Everex.io – currently running its token sale – aims to create microfinance and remittance services for emerging markets. Everex is actually the first company to offer cross-border microcredit services, and the first to make all financial activity available for public audit on the blockchain and they’ve been working with Thailand and Myanmar to provide migrant workers access to blockchain remittance. Everex transactions are settled on the basis of 100 per cent-backed, Ethereum-based Cryptocash currencies. As a result, fiat money can now travel around the globe at the speed of the blockchain.

ICOs as new funding sources

Blockchain has also helped lower barriers to startup financing. Token sale and initial coin offering (ICO) have become popular means for blockchain startups to raise funds. Since new blockchain platforms allow these companies to create their own cryptocurrencies, startups could offer these tokens for sale in exchange for investment. These ICOs effectively disrupt venture capital and traditional investing and even the business loans market.

Singapore-based TenX was able to raise US$80 million in its token sale showing that major funding can be achieved from the effort. A startup doesn’t have to be in a US or European tech hub to be able to secure such funding either. Funding records are also continuously being broken. Recently, Tezos broke the token sale record by raising US$232 million in its ICO. Previously, Israel-based Bancor put up US$153 million to fund its projects.

Unlike traditional funding rounds, token sales and ICOs can happen much faster. Token sales and ICOs could easily be held. In contrast, funding from venture capital and angel investors can take months to get settled. Initial public offerings are usually years in the making and requires a thorough administrative process.

New tigers?

The previous Four Asian Tigers – Taiwan, Singapore, Hong Kong, and South Korea – have all emerged to join the likes of Japan to become global contenders. The rest of Asia is trying to catch up. There has been much growth and development and many would want to grow beyond emerging market status.

The good thing is that technology has been the great leveler. Asia doesn’t have to look far to see how technology could drive growth. Israel, despite its lack of natural resources, was able to use technological expertise to dominate key tech verticals such as cybersecurity and software-as-a-service.

China and India are also two dominant economies that are keen on graduating as developed countries. China has been quite aggressive investing in trending technologies and blockchain has been among its focuses. India has presence in blockchain but the scene still needs to mature. Other tech hubs would do well expanding their views beyond bitcoins and payments.

As it currently stands, blockchain tech is empowering startups in two major ways. First, blockchain has brought new opportunities for ventures to explore new business models. Second, the technology allows startups to secure significant funding. With such a powerful technology available for use, every country’s tech hub is now poised to drive economic growth.

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he views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your post here.

Featured Image Credit: 123RF Stock Photography

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